Angry Birds' falling profits show the perils of being a one-hit wonder
The bad news for Rovio, the company that makes Angry Birds, is that gaming sales were down slightly over last year. The worse news? The private company now has 300 more employees, meaning it made less than half the money it did in 2012. Still, Rovio claims it isn't worried about falling profits, which were eaten up in part by a new animation studio, theme park deals and a merchandising arm. The latter division is undoubtedly a success, with plush toys and other consumer products now accounting for nearly half the company's sales.
But the other new ventures remain a question mark, since the Angry Birds movie isn't scheduled to arrive until 2016, for instance. That leaves gaming to carry the rest of the load, and the news there is a downer. Despite having launched Angry Birds Star Wars II and other properties in 2013, the company actually made less on games than the year before. To counter that, Rovio recently launched freemium features like in-game purchases, which can make money but tend to alienate gamers. However, it remains to be seen if that will boost Rovio's earnings. Like the animation studio and other recent decisions, we'll likely have to wait until next year to find out.
The WSJ has another reality check, too. It has shown that Rovio's growth is seriously lagging behind others -- not only the big fish like King, the maker of Candy Crush Saga, but also other, far less experienced Nordic game devs. Come to think of it, all of these outfits might want to pay attention to Rovio's current plight. Given consumer attention spans, relying on a small number of gaming properties can be a risky strategy.
